Breakthroughs in institutional reform along with easing monetary and fiscal policies would help Vietnam’s GDP growth to average 6.76% in the 2021-2023 period, with the growth rate this year of around 6.47%.

In this case, the inflation rate in 2021 is estimated at 3.56%, lower than the government’s target of 4%.

Overview of the conference. Photo: Ngoc Mai

Head of the General Research Department under the Central Institute for Economic Management (CIEM) Nguyen Anh Duong revealed the first out of three growth scenarios set up by the agency in a conference under the Australia supports Vietnam’s economic reform program (Aus4Reform), discussing efforts to boost Vietnam’s economic growth in the post-Covid-19 pandemic on April 22.

“This is the best way for the country to ensure sustainable and rapid economic growth amid global uncertainties,” Duong noted.

In a second scenario when the government only focuses on easing monetary and fiscal policies, the economic growth would be 6.32% in 2021, slightly lower than that of the first scenario, and eventually reach the rate of 6.69% for the 2021-2023 period.

“However, inflation as a result of these policies would mean higher inflation, which is 3.78%,” Duong added.

For the least optimistic scenario with an assumption of minimizing intervention of fiscal and monetary policies, the CIEM forecast Vietnam to achieve a GDP growth of 5.98% for this year and around 6.35% for the next three-year period.

Production at Det Kim Dong Xuan (Doximex). Photo: Kinhtedothi

CIEM’s Director Tran Thi Hong Minh said while Vietnam is among the countries that have successfully reopened the economy on the back of effective Covid-19 containment, “it needs a long-term development plan to nurture driving forces for continuing reform.”

“Slow economic recovery could create hurdles for ongoing economic reform efforts. Therefore, a harmonization between policies to aid economic development and institutional reforms is significant for long-term growth,” Minh said.

For this year, the CIEM’s expert suggested the necessity to maintain effective Covid-19 fight, address concern for businesses and people affected by the pandemic, and push for economic reforms.

In 2022, the government should combine economic recovery with institutional reform, and one year later, to gradually withdraw supporting policies for the economy and shift focus on reform.

Giving a more detailed proposal on economic reform, economist Le Dang Doanh told Hanoitimes that digital economy should be the priority for Vietnam in short-term.

“Institutional reform should go hand in hand with promoting digital economy, as e-government could minimize direct contacts and enhance transparency in the process of realizing administrative procedures,” Doanh noted.

“In a rapidly changing world, local enterprises without digital transformation would face difficulties in taking part in value chains of multinationals,” he suggested.